Transcript No. 99/56

Peter Costello is the Federal Treasurer and the Member of Federal Parliament for the

seat of Higgins in eastern suburban Melbourne. Peter Costello, good morning.

Good morning Jon.

Everybody’s talking about the republic and the republic referendum. Tim Fischer is

expected to say at a National Press Club luncheon today that he recommends a

‘Yes’ on the November 6 referendum. Where does Peter Costello stand?

Well, I made a speech at the Constitutional Convention, I’ve made some comments

since saying that I think Australia will become a republic. I think if you look at it on a

time frame, and I’ve said this to many of my friends who are constitutional

monarchists, that Australia over the whole course of this century has been gradually

lessening the relationship with Britain; in my own lifetime changed the national anthem,

abolished appeals to the Privy Council, and I think will eventually one day become a

Republic. And I just don’t think that the symbolism of the monarchy is something

that’s going to carry Australia through the 21^st Century. And so I have

said that I think it’s important that we consider the issues carefully, but on the

big question as to whether Australia should or will become a republic I think we will.

But on November 6^th a question, and in a moment I will ask you what sort of

a question should be put, but a question will be put on November 6^th. Should

Australians seize that opportunity, regardless of what’s in the question?

Well Jon, I actually argued for a different model at the Constitutional Convention, but

I think it would be churlish of me to say that because there wasn’t a majority

support for my model I’ll be voting ‘No’. In fact I will be supporting the

current referendum proposal, because I think this is something that we in Australia have

to deal with. We have to face up. Now there will be some people voting ‘No’ in

the referendum because they’re Constitutional Monarchists, and some voting

‘No’ in the referendum, so they say, because they’re radical Republicans.

Some say if you vote ‘No’ you’ll get a Monarchy and some say if you vote

‘No’ you’ll get a radical Republic. Now they can’t both be right, can

they? And if the “No” vote were to get up, what they are foreshadowing is that

the two poles will then turn on each other. The moderate in-between position having been

defeated, they are foreshadowing a second vote where the two poles will turn on each

other. Now I don’t think that would be a good thing for Australia, and certainly is

not my own view. I would rather support a moderate, decent proposal which has the best of

our current situation whilst renewing the symbolism for the future rather than have the

moderate centre defeated in the referendum and the two poles fight it out between

themselves, neither of the alternatives of which I would personally find appealing.

So Peter Costello recommends that conservative and pragmatic Republicans come together

to vote ‘Yes’ on November the 6^th.

I think what you can say about this model is, one , it preserves the best of the

Westminster system, and radical republicans would, in my view, abolish the current

Westminster parliamentary system as we know it, with a popularly elected political

president. So I like it from that point of view. Secondly, I think it enables us to keep

what is best of the past whilst renewing the symbolism of the future. And what concerns me

is the two poles, both saying ‘No’, with the possibility of turning on each

other. I think probably both using each other; the Constitutional Monarchists using the

radical Republicans to defeat a moderate proposal, the radical Republicans using the

Constitutional Monarchists to defeat a moderate proposal, the two poles defeating the

centre and then slugging it out in a much more divisive debate with no moderate or

conservative position in the middle. That’s what really concerns me.

It was odd enough to see Peter Reith, John Howard and Phil Cleary all on the same side.

But what is even odder perhaps is seeing Moira Raynor, Jeff Kennett and Peter Costello now

all coming together to recommend a ‘Yes’ vote on November 6^th.

Well, regardless of who comes from where, and I don’t think you can decide these

things on Mr X, Mrs Y or Androgynous thing Z – I’m not saying any of those

people are any of those things…

Just as well…

…I think the important thing is to look at the issues. Now it sounds nice to say:

‘ Oh well, all you’ve got to do to defeat the moderate Republic and you’ll

get a radical one’, but there are thousands of unanswered questions about that. You

can always knock down something that is, and if you ever got around to the stage of

drafting a Constitutional amendment for a directly-elected president, you would find a

thousand more questions than you’ve got about this model.

The other issue of course is what question will be put on November the 6^th

that you recommend a ‘Yes’ vote for. The Committee chaired by Bob Charles

that’s reported to the Parliament, and whose report is covered by Parliamentary

privilege, it’s said are going to say to us – and we have to put it in those

terms because we’re not supposed to breach Parliamentary privilege here – the

question should be as simple as this: “Do you support Australia becoming a republic

with the Queen and Governor General being replaced by an Australian President?” Do

you think that’s the sort of question, those are the words that should be put on

November 6^th?

I think that’s a pretty fair rendition of it. Look, it’s up to the committee,

we’ve got an all-party committee, they’ve been asked for their advice. I

don’t know whether they’ve recommended that or not…

It’s widely leaked.

Let’s take it that they have, right, because I think they’re all still saying

it’s a secret. It just happens to be on the front page of the newspaper but it’s

secret, but let’s suppose they have, that seems like a pretty fair question to me. I

would actually put the question differently myself. The thing about Constitutional

referendums, you can have a thousand views.

Everyone has their own.

And this is why I don’t agree with this belief, by the way, that until you get in

a Constitutional amendment every last concept of your own you should vote ‘No’.

If that had been the view, let me say, if that had been the view at the beginning of

Federation I don’t think we would have had Federation, nor incidentally would I have

voted for the current Constitution. There are parts of the current Constitution I

don’t agree with. But I take the view that Australia as a nation was right to

Federate. We shouldn’t have put off Federation for decades and decades until every

last person got every last view. And I take the same view in relation to the current

referendum. It was not my Number One proposal, but to stand back and say until I am

satisfied in every detail, I think would be churlish. I think that this will happen in

Australia. I think that those people who want to see it with goodwill whilst preserving

the best of the current situation will support this proposal, and those people that are

voting ‘No’ for completely contradictory reasons are really just shaping up for

another fight down the track which will be much more difficult than the current question.

If you support the simplified question that it seems is going to emerge from the

all-party committee, if you support that question that puts you at odds with your own

Prime Minister, with John Howard.

Well I’m not entirely sure what the Prime Minister, whether the Prime

Minister’s been consulted on this committee question, I’m not entirely sure what

the process will be for the consultation. But as I understand it the committee was set up,

the committee has come up with that question, it seems a fair question to me. The other

question that’s also in the paper has been put up, that has certain merits. I would

in fact have my own question, but I would be happy to go with the all-party committee.

I’m not entirely sure at the end of the day that the referendum is going to turn on

the wording of the question. I think at the end of the day referendums turn on the general

political situation, but if you ask me whether it’s a fair question I think it sounds

a fair question to me.

One last question on the republic, an increasing number of your ministerial colleagues

seem to be recommending a ‘No’ vote. Are you going to lead the charge for the

government on the ‘Yes’ vote? Will you actively campaign?

I don’t constitute myself a leader on this issue. It’s not something that

I’ve started, nor do I have any portfolio responsibility. What I am going to do is I

am going to state my view. What I am going to lead on, is, I am going to lead on tax

reform. I am the Treasurer of Australia, we have an historic moment to reform our tax

system, it is my responsibility to lead. I’ve started this and I intend to finish it.

That’s something I am going to lead. This is another political issue which I am going

to speak on, but I don’t constitute myself a particular leader on.

JOURNALIST:

Tax reform has preoccupied you and quite properly. We heard on AM from Ian

Donges who is the head of the National Farmers’ Federation, saying now is not the

time to add business tax reform, The Ralph Report, on top of the GST. Enough. We are

having trouble coping with the GST reforms as it is. What’s your response to that?

Well it’s a huge reform agenda, and I know only too well because you know I am

having to cope with this. We’ve got on 1 July 2000 a new system of indirect tax

coming in, GST, abolition of wholesale sales tax . . .

Just take your elbow off the button there Peter, thank you. Keep going.

On 1 July 2000, just in case I wiped myself out . . .

You did.

. . . we’ve got the GST coming in and the abolition of wholesale sales tax, the

abolition of some stamp duties on share transactions leading into the abolition of

financial institutions duty – that’s a big thing. On 1 July 2000 we’ve got

massive income tax cuts coming in. We’ve got a new system of Commonwealth-State

relations, we’ve got new family allowances. We also have coming in, the Pay As You Go

system of company tax, which will be a change for business. They will start paying

quarterly under a Pay As You Go system which will also work off the GST. On 1 July

we’ve also got entity taxation coming in, this is already what’s been announced.

Now, the Ralph Review is talking about other things like capital gains tax, talking about

the way in which businesses treat profits, talking about rates of company tax. There are

some of those things that can come in, I think, without much dislocation. And I don’t

think they will add to the complexity. There may be some other things that would add to

complexity that can be staggered. And if they can be staggered well, we’ll look at

that. But there are some things that can come in without too much additional problem. And

we’ve got to keep moving Jon. Look, this is a once in a century chance to reform the

taxation system. It’s 1999, we keep moving, we do it now, somebody can sit back and

say, well, we don’t have to do it for another 50 or another 100 years. But I just

don’t want to lose the momentum at the moment whilst we’ve got it.

But people are quite right to say, you’ve just rattled off a formidable list . . .

Oh sure.

. . . of things that are changing. And in a world that is changing people say,

there’s just so much that we can take. You can overstay your welcome with the

business community, with the farmers. The Prime Minister in New York was saying to foreign

investors in New York, look, we’ll drop company tax if we possibly can to help you.

And then the farmers come out and say, hang on, what are you doing anything to help them

for when you’re not doing that much to help us. You’ve got a formidable array of

interests to play off . . .

Sure, that’s right. And can I talk about farmers in particular. I’ve been

Treasurer now for about four years. I don’t think we’ve introduced a measure yet

which has made the business or the tax climate for farmers worse. In fact, quite the

contrary. We’ve introduced farm management deposits and we’ve helped them with

land care rebates and I can assure you in the business taxation area, the farmers, the

agricultural producers of Australia have a special ear in the Government and they will be

well treated because they deserve to be well treated. There’s no doubt about that.

But let’s come back to the other point. There is a formidable, a formidable reform

agenda, you’re absolutely right, completely agree with you. But let’s suppose we

were to drop rates on various kinds of taxes. Would that increase complexity? Not

necessarily, all you’d do is you’d assess your tax in the same way but pay less

of it. Now, I don’t think anyone would say to me, oh Treasurer, Treasurer, you know,

put off a tax cut, it’s all too complicated, we’d rather pay a bit more tax for

the next year or two. I think they’d most likely say, give that to us now, we’re

quite happy to take that complexity.

But that tax cut would come along with other equalling measures which would make up for

that lost revenue. And what they’re saying is, we want the tax cut but we don’t

want some of the other measures, the other compensatory measures, because you’ve said

that the Ralph Report will be revenue neutral.

Sure and I understand that in respect of some of the items. But in respect of some of

the other items, some of these high-falutin’ minimisation opportunities which could

be closed down, and not the kind of thing the guy in the suburban street is going to worry

about. They’re the kind of thing that people with massive resources worry about and

if we increase the complexity for them because we’re making them pay more tax, well,

I’ll live with that.

Alright, what else is in the Ralph Review, will you tell us, are you going to simplify

capital gains tax?

Well, we asked John Ralph to look at business taxation which is rates, deductions,

capital gains taxes, he’s looked at foreign investment, inward investment,

withholding taxes and those sorts of things . . .

Are you simplifying capital gains tax?

I asked him to look at capital gains tax and I said the reason was, we should look at

simplifying and reducing. I put three proposals to him and said, have a look at these

three and come back with any better ones. So, I imagine he’s done all of that.

And fringe benefits tax changes? Car manufactures, already, are saying, they’re

terrified that if you muck around too much with fringe benefits tax changes you’ll

wipe out company fleets.

Sure, everything leads to everything else and that’s why in relation to tax

you’ve got to do it as a whole. It’s another reason for doing it as a whole,

Jon, because for many people there might be a downside here and an upside there. If you

separate the two they don’t get the balanced improvement, it’s another reason

why you’ve got to move forward in packages.

Alright, a couple of other things that are on the agenda, Peter Costello, gambling. A

couple of weeks ago the Productivity Commission report was released on gambling. You said

at the time you were very happy with the report. A quick response from Victorian Premier,

Jeff Kennett, was a bit of a U-turn on the State Government’s policy on gambling. He

conceded that there needed to be limits on ads and that the cap on the number of pokies

would not be reviewed. Are you satisfied with the Victorian State Government’s

response?

Well, I support those announcements. I think they’re great announcements. When I

set up the inquiry with the Productivity Commission, I didn’t have a clue what it

would report. I knew there was community concern about gambling and as a Treasurer I was

beginning to worry about the effect of gambling on the social and economic health of

society. When it came back, and the finding that I found the most extraordinary, almost

frightening finding, was the finding that we had more than 20 per cent of the world’s

gaming machines in this one country. I was staggered by that. I didn’t know that it

had penetrated to that extent and frankly it shocked me. And I think it probably shocked a

lot of other people. And if this is going to lead to bringing the problem out into the

open, restricting the proliferation, then I think it’s been a major step forward. A

wonderful step forward to have brought it out into the open.

Alright, this week on the programme we’ve heard about some tensions within various

branches of the Liberal Party. Of course the preselection down at Brighton, which Louise

Asher won, saw some uncomfortable moments within the Liberal Party and now again out in

Doncaster – Victor Perton was speaking to us on the programme on Monday. Are things

difficult within the Liberal Party at the moment? Are there factions developing?

Well, in relation to preselections there have been some issues that should not have

occurred in relation to both those preselections. But is it a new thing? Well, I think

nearly every preselection generates its own emotional heat and light. It’s always

happened, I don’t think this is a new thing. Now, that is not to excuse it and

incidents should not have occurred in either of those areas, or indeed some which are now

proceeding, there are other incidents which are occurring.

The so-called Greek branch stacking?

Well . . .

The Premier’s adviser Nick Kotsiris has been mentioned.

In other preselections which are now proceeding there are also incidents which should

not occur. Now, I think it’s much better if everybody sort of concentrates on the

policy issues and the credentials. The one thing you can say is, that these things are

open contests, that’s one of the things about the Liberal Party and I think our

processes are designed to try and get the best candidates at the end of the day. I hope it

does.

Well it’s a different method to that used recently by both the National Party and

the Liberal Party in Victoria. The Premier is said to be trying to get Billy Brownless

from the Geelong Football Club to sign up for the Libs and of course Paul Couch has been

signed up by the Nationals – another Geelong footballing hero. You’re a mad keen

Essendon supporter, have you had a look through the list?

Well, I think this impasse could be broken with say, James Hird, who could get the

consent of all the forces in the Victorian Coalition. You know, one Geelong player,

another Geelong player, let’s try and get a circuit breaker and go one better.

I s’pose the Speaker would say, I demand that the Member be Hird.

Yes, yes, it’s, your spelling is right to the point there Jon.

Peter Costello, good to talk to you.

Thanks.

Thank you for your time today. The Federal Treasurer and Member for the seat of Higgins

in the Federal Parliament, Peter Costello.